Scottie Scheffler and the ‘happy amateur’ investor

Sports and investing share many parallels¹. They’re about performance, winning, losing - and uncertainty. Whether you play for the All Blacks² or the Bondi Breakers, there are days you’ll run on the pitch happy and trudge off muddy - and miserable. 

Sport and investing are also populated by ‘happy amateurs’.

At golf, I’m a happy amateur. If I hit a five-iron 180 metres to five feet from the hole I’m deliriously happy. If Scottie Scheffler,³ the world’s number one golfer, hits a 180-metre shot to five feet, he’s happy too. Not as surprised. But happy. 

The investing world has thousands of happy amateurs. Today, an SMSF investor with a portfolio of CBA shares would be a happy amateur. If you started investing in global shares around 2020 and decided the Magnificent Seven⁴ technology stocks were the future, you’d be a happy amateur. It’s likely your portfolio outperformed the relevant indices (the ASX All Ordinaries or the S&P500) and many professionally managed share funds. 

A different way of counting score

So how can a happy amateur beat the market and serious professionals? Because they’re playing a different game. 

An institutional grade portfolio is built with more science than most amateur portfolios. It’s also built with more constraints. 

For the professionals, buy and sell decisions demand careful research and copious documentation. There are limits on how much of each security you can own and around stock, industry and geographical concentration. Many local fund managers simply can’t hold big positions in CBA right now because its valuation, or its weight in the index, fall outside the rules of their investment process. So, the happy amateur loads up. And the careful professional diversifies away. 

What is the lesson? 

It’s about the risk

Professional investors build constrained portfolios to systematise decision making and manage risk. Amateur investors have free rein and sometimes this pays off big. For decades, investing in Sydney real estate has mostly been a one-way winning ticket. But professional investors – and financial planners - would never suggest investing all your capital in residential property in one city. 

Given what we’ve seen over the past 30 years, the idea that Sydney property has been risky for years seems crazy. US property investors thought the same early this century until the banks foreclosed on over 3.5 million properties between 2007 and 2010.⁵  Professional investors are always seeking to protect against that apparently small but vastly damaging risk. 

“…process is a talent”

Another divide between the amateur and professional investor is a focus on philosophy and process, on how you make investment decisions. A defined investment process/philosophy has serious advantages. 
 

• Emotion - fear, greed, the urge to follow the crowd - sway both amateur and professional investors.⁶ A sound investment process mitigates their influence. 
• A defined investment process, like any good strategy, outlines what you won’t do as well as what you should do. It limits you to assets that pass tests for quality, value and diversification. That can make investing safer and more predictable. 
• Process reduces the randomness of investment decisions. A process can be tested and refined. If you invest based on trends, gut-feel or tips, you can’t get better. Just luckier. Or poorer. 

This takes us to another sporting parallel. In a speech at Dartmouth College, Roger Federer, winner of twenty tennis majors, discussed talent.⁷ 

According to the Swiss maestro, extraordinary eye-hand co-ordination explains only part of his success. “Discipline is a talent,” he said. “So is patience, trusting yourself is a talent, embracing the process, loving the process is a talent.” 

It’s not amateur vs professional

As a professional investor I’m always thinking about risk and process. Some of my friends are happy amateurs who combined luck and skill to achieve returns that led to more comfortable lives. Other amateur investors simply love investing.⁸ They enjoy the intellectual stimulation and competing against the market so there’s a payoff for playing, not just for winning.

But for most investors, the discipline and careful risk-management built into professional investment portfolios can – I believe - deliver better, more predictable results over the long term. Just as importantly, it helps those investors sleep more easily. Not only because they don’t have to worry about market moves overnight. But because they’re investing methodically in pursuit of their goals. 

1. https://www.platinum.com.au/curious-investor-behaviour/building-a-champion-team 
2. https://www.platinum.com.au/curious-investor-behaviour/all-blacks-the-outcome-of-a-system 
3. For anyone who doubts “trickle-down economics” I give you Ted Scott, Scheffler’s caddie, who earned over $5 million dollars in 2024. See www.golfmonthly.com/news/how-much-scottie-scheffler-caddie-won-2024 
4. Alphabet (Google), Amazon, Apple, Meta (Facebook), Microsoft, Nvidia and Tesla
5. https://www.platinum.com.au/curious-investor-behaviour/buy-low-sell-high-sounds-simple-but-investors-ne 
6. www.chicagofed.org/publications/chicago-fed-letter/2016/370
7. https://home.dartmouth.edu/news/2024/06/2024-commencement-address-roger-federer 
8. The word amateur comes from the Latin, amare, to love.